Jeff Ely and Tyler Cowen think that a useful economic stimulus could be provided to the US economy by repealing prohibitions on trade with Cuba, immigration, drugs, prostitution, gambling and guns.

Some of these look like no-brainers (eg. particularly trade with Cuba, for which there is little rationale outside Florida politics). Others seem dubious (do we really want to boost gun ownership in the developed country with the highest rate of gun deaths?). And some aren’t so relevant to a country like Australia, where gambling and prostitution are mostly legal. Of course, the list makes one wonder about other omissions. Could we beat the recession by legalising gay marriage? How about if we introduced an R-rating for videogames and allowed them to be sold in stores?

But as an empiricist, I can’t help yearning for a little evidence. For example, has anyone looked at whether the cessation of alcohol prohibition in 1933 raised US GDP? Google Scholar seems to say that it’s an unanswered question, but perhaps readers know of something.

One Response to Permissiveness as Fiscal Stimulus

“do we really want to boost gun ownership in the developed country with the highest rate of gun deaths?”
.
I’ll bet that wouldn’t make much difference in the US — surely gun ownership is already so high and the type of guns you can buy already so varied that a few wackos buying a few more to complete their collections (which are probably legal in some states anyway) wouldn’t influence the gun death rate too much.

As for drugs, I’d bet that would reduce GDP, as large numbers of people wouldn’t be needed to police them, look after people in jails because of them etc.